Squamous differentiation is a multi-stage process. Irreversible growth arrest occurs early during this press of differentiation and is induced when cultured cells reached confluence or after treatment with interferon gamma (IFNg) or phorbol esters. We have been using IFNg as a tool to obtain insight in the control of irreversible growth arrest. We have shown that IFNg blocks growth at a specific point in e G1 phase of the cell cycle. Numerous cell cycle regulatory proteins and events were found down-regulated by IFNg, including cyclin A, PCNA, cdc2, p53, p21 and cMyc synthesis. In addition, IFNg, inhibits the hyperphosphorylation of the retinoblastoma protein RB. Using a time course of IFNg addition to synchronized cells, we investigated the cause and effect relationship to IFNg-induced growth arrest of the various cyclin/cdk kinase activities and complexes that are reported to regulate G1 progression. Irreversible growth arrest is followed by a cascade of changes in squamous cell- specific genes. Our laboratory has identified and cloned several genes that are differentially regulated during squamous differentiation, these include transglutaminase type I (TGase I), cornifin a and b, relaxin and a gene related to PMP22. To study the regulation of these genes, we cloned the 5'-flanking region. Footprinting, deletion mutation and mobility shift assays ere used to identify DNA elements important in the transcriptional regulation of these genes. Retinoids are important regulators of squamous differentiation. Retinoids inhibit the expression of keratin 13, TGase I and cornifin a and b, while they induce other genes, such as keratin 19 and TGase II. Nuclear retinoid receptor- selective agonists, an antagonist and a dominant-negative RARa receptor were used to study the retinoid signaling pathways involved in these actions of retinoids. Our results have demonstrated that the induction of TGase II is mediated by an RARa-dependent mechanism.